The ten iron rules for short-term trading include strict stop-loss, light position diversification, following the trend, planned trading, decisive profit-taking, paying attention to Bitcoin and market sentiment, controlling trading frequency, focusing on technical analysis, being wary of external risks, and maintaining a good mindset.
1. Strict stop-loss, refuse to hold positions Each trade must have a preset stop-loss level (it is recommended that a single loss does not exceed 1-2% of total capital), and unconditionally exit when triggered. Avoid losses from waiting to break even or fantasizing about a rebound, especially in the highly volatile crypto market, as holding positions can lead to significant losses.
2. Light position operation, diversify risks The position of a single cryptocurrency should not exceed 10-20% of total capital to avoid full position betting. Retain at least 30% cash to respond to sudden risks, such as being able to add positions or switch positions during a sharp decline. Newbies are advised to divide funds into 5 parts, using only 1/5 for each entry; losing 5 times would only result in a 10% loss of the principal, making it easier to maintain a stable mindset.
3. Follow the trend, align with market trends Only go long in an uptrend, do not bottom fish in a downtrend, and reduce operations in a sideways market. Focus on strong coins with rising volume and price (such as mainstream coins led by Bitcoin), and avoid obscure weak coins. Note that 'the strong get stronger'; a pullback during an uptrend is an opportunity, and do not blindly bottom fish during a downtrend.
4. Plan trades, refuse impulsive actions Review and select targets the night before, clearly define buying conditions, target prices, and stop-loss levels, and avoid chasing prices or making sudden decisions during trading. Shield against short-term fluctuations or rumors, and avoid changing strategies due to emotions or real-time market conditions.
5. Be decisive in taking profits, neither greedy nor fearful Take profits in batches after reaching expected gains (such as 10%-15%); if the price weakens after profit, sell even if the target hasn't been met. Avoid 'profit drawdown'; for example, after a 15% gain drops to 10%, first take profits on part of the position and observe the remaining.
6. Pay attention to Bitcoin and market sentiment Bitcoin is the barometer of the crypto market, and most altcoins rise and fall with it. Also, note the inverse relationship between USDT and Bitcoin (be cautious of Bitcoin dropping when USDT rises), and monitor key trading periods for fluctuation signals, such as 0-1 AM, 6-8 AM, and 5 PM.
7. Control trading frequency, wait for opportunities When the market lacks a clear direction or sentiment is waning, it is better to stay out and observe, avoiding ineffective operations. It is recommended to control the average daily trading frequency to 1-3 trades to reduce transaction fees that erode profits.
8. Focus on technical analysis, simplify indicators Proficient in using 1-2 core indicators (such as MACD, trading volume, moving averages), pay attention to key signals like support/resistance levels and volume breakouts. For example, a golden cross below the MACD 0 line is a buying point, while a death cross above the 0 line is a selling point; a volume breakout at a low level can be followed, while a stagnant high volume needs to exit.
9. Beware of external risks, pay attention to key information Cryptocurrency prices are significantly affected by policies from various countries (such as cryptocurrency regulation), U.S. financial policies (such as interest rate hikes), and statements from influential figures (such as Elon Musk), so keep an eye on financial news. Also, avoid 'meme coins' that have surged (99% are traps for the unwary).
10. Maintain a good mindset, regularly review and optimize Do not panic during a big drop or get smug during a big rise, avoid emotional trading (such as revenge trading after a loss). Record trading details daily, analyze the reasons for gains and losses, and track data such as win rates and profit-loss ratios to eliminate strategies with continuous losses.
Note that the cryptocurrency market is extremely risky, and factors like policies and technology can cause severe fluctuations. The above rules are merely references for reducing risks; actual operations should be cautiously decided based on one's own risk tolerance.
